A good week to jump on the saving bandwagon

Need a reason to start saving? Here's one: It's America Saves Week, which started February 24 and runs through March 2.

America Saves Week is a national campaign organized by various nonprofit, corporations, and government groups aimed at reaching increasing awareness that people need to save money and reduce debt. Its primary focus: encourage people to act by making a commitment to save, invest, and build wealth.

"This year, the focus is on making saving automatic," said Nancy Register, associate director of the Consumer Federation of America in Washington, D.C., and national director of the America Saves campaign. Here are three ways to do that:

• Sign up for or increase the amount you’re putting into your employer’s tax-deferred retirement plan (commonly called a 401(k) or 403(b)). The money comes right out of your paycheck, so after the first one or two pay periods, you’ll never even notice that you’re putting it away.


• Open an individual retirement account (IRA) and set up regular deposits from your checking or savings account. The maximum amount you can contribute to an IRA in 2008 is $5,000, which comes to $96 a week.


• Build an emergency fund by setting up automatic deposits into a money market mutual fund or savings account. A well-funded emergency savings account has three to six months of living expenses.

If you still need a little encouragement, visit America Saves.org. You can sign up for monthly saving “pep talks,” get tips on how to save, and see how others have turned their lives around by becoming “Savers.” You can even connect with Savers in your local area.

Check out Carnival of Personal Finance #140

Lots of great personal finance articles in this week's Carnival of Personal Finance, hosted by The Financial Blogger. My favorites:

Emotions and money: Thanks to Suze Orman's new book, A Dollar a Day discovers if she's going to be generous, she also needs boundaries.
11 ways to save money: The first one is using a coin jar; how could it not be one of my favorites?
What is a Certified Financial Planner?: If you don't know, you should. Hint: It's different than a CPA.

Consumers' credit card pain may be a long-term gain

One positive coming out of the current credit crunch: people may be thinking twice about using their credit cards.

The Associated Press recently reported that growth in consumer borrowing slowed sharply in December (holiday shopping season, even!) and was at its weakest level since last April. Meanwhile, credit-card delinquencies and defaults in December were up substantially from a year earlier, The Wall Street Journal noted.

To some, that’s a bad sign. The drop in credit-card use shows that consumers are "in trouble," according to one gloomy investment firm executive quoted by MarketWatch. "It reinforces the view that consumers are struggling with the bad housing market and tight credit. It doesn't bode well for the economy."

Maybe in the short run. But long-term, more consumers paying cash and being more cautious about debt is a good thing. How truly healthy can our nation be financially if the economy tanks because consumers stop buying things they can’t afford?

Not that I am completely anti-credit card. M and I still use a Chase Travel Rewards card for non-impulse items, such as gasoline, and planned purchases we fund with cash from our savings accounts (for which we don’t have a debit card).

But it’s a big change from more than a year ago, when we used our rewards card to buy just about everything, then paid off the full balance each month. I haven’t done any hard calculations, but I do believe that using a debit card connected to our checking account causes us to spend less in general and helps us stay within our means.

No doubt, a lot of people with overdue credit card and mortgage payments will experience a lot of pain in the months ahead, pain which will continue spreading to the economy and financial markets overall. But if that pain also teaches us something, maybe we’ll all be the better for it.

Have you cut your credit card spending recently because you are struggling financially? E-mail me your story at coinjar@yahoo.com.